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The Wall Street regulator overseeing prediction markets is so confident in his effort to box out states and tribes that want to oversee the burgeoning industry that he would “welcome” a Supreme Court ruling on the issue, he told Semafor.
“A Supreme Court ruling on this really will settle the matter — but Congress did so when it drafted our statute,” Commodity Futures Trading Commission Chair Mike Selig, 36, said in an interview Thursday. “I don’t think this is so much an area of law where there’s a lack of clarity.”
As lawmakers in both parties weigh stricter constraints on prediction markets than his own, Selig also invited them to pursue legislation — which would have a slim chance of becoming law during President Donald Trump’s administration: “Congress can change [the statute] if there are concerns,” he said.
Selig, serving alone atop the five-person bipartisan commission after crypto billionaires Tyler and Cameron Winklevoss spoke out against Trump’s initial pick, floated new rules for prediction markets this week that would limit wagers on sports while prohibiting those on war, terrorism or assassinations. Selig posited that platforms like Kalshi and Polymarket could ensure listings are “approved by the leagues,” pointing to wagers on injuries and officiating.
It’s a relatively permissive approach emblematic of the industry-friendly way Selig has approached his job so far: He’s also taking states and tribes across the country to court for banning prediction markets or attempting to regulate them like casinos or sportsbooks, rather than derivatives exchanges.
“To the extent there’s any conflict between these courts and there’s a split in the decisions, of course the Supreme Court may take that up and we’d welcome that decision,” Selig said. “But thus far, we’ve been very successful in arguing these points … and again, it’s in the statute.”
Some lawmakers are trying to tweak that statute. Among them: Sens. Dave McCormick, R-Pa., and Kirsten Gillibrand, D-N.Y., who introduced a bill earlier this year that would lean into Selig’s case for federal jurisdiction by updating the CFTC’s statute for prediction markets.
Selig didn’t see that as necessary.
“We have all the tools we need under our statute, so there’s nothing in particular that I think needs to be added,” Selig said. “We prohibit insider trading; we prohibit manipulation, fraud, and other types of abuses.”
“People concerned [are] the same people that failed to take action under the last administration,” Selig added later. “So I put that back on them.”
Selig, who sued Minnesota last month after its governor enacted a ban on prediction markets, said he was weighing similar action against other states “across the country.”
“To the extent any state proposes a law that is illegal — essentially a law that conflicts with federal law — we have to take action,” he said.
Selig also signaled little urgency in naming additional CFTC commissioners: “We don’t want to put people on the commission that aren’t qualified.”
As for CME Group CEO Terry Duffy’s warning that the CFTC’s greenlight of perpetual crypto futures is “a disaster waiting to happen,” Selig said: “Incumbents are always going to fear the future.”
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The following is a transcript of Semafor’s interview with CFTC Chair Mike Selig, which has been edited for length and clarity.
Eleanor Mueller: The agency this week put out a notice of proposed rulemaking on prediction markets. Can you walk us through the feedback you’ve gotten?
Mike Selig: We put out an advance notice of proposed rulemaking on prediction markets, taking action to set clear rules of the road for this new market. And we recognize, of course, that this asset has been around for a long time. It’s been around since the 90s.
But there have not been clear rules around what sorts of products can be offered and how the CFTC is going to consider what’s in the public interest when choosing to accept or reject these contracts. So there’s certain areas prescribed for us in our statute. That’s war, terrorism, assassination, gaming, and activities that are legal under federal or state law that we’re intended, under the statute, to take a special review of.
That means that we consider what’s in the public interest when looking at those contracts. But our statute doesn’t prescribe specifically what definitions apply to, for example, gaming. So we are looking to propose a definition for gaming that’s very much common sense: what you would think of as gaming, [like] sports, recreational, entertainments, games and that sort of thing. And then also setting forth some factors that we’re going to assess in determining what’s in the public interest.
We want to make sure that our markets have integrity. So there are a number of integrity factors … we’re proposing to consider. And we want to make sure that, for example, for contracts relating to terrorism or war in the Middle East, these types of contracts are generally speaking not permitted in our markets. It would be against the public interest for national security reasons, pursuant to these factors among other reasons, right?
So these contracts, by and large, will not be available in the United States. To the extent someone wants to offer a sports contract, we’ve laid out a number of factors that we’ll consider. There are certain types of contracts that we have proposed to be concerning. Those might involve injuries, for example; officiating calls; and then there’s other considerations around, for example, sports integrity, making sure the leagues are involved in these conversations. If the leagues have spoken to an issue and have concerns, we want to make sure that the exchanges are also working with the leagues to make sure that everything they’re listing is approved by the leagues. that the leagues are also at the table for these decisions.
Do we have a timeline for proposing the rule?
Under our advanced notice of proposed rulemaking, we received nearly fifteen hundred comments. This is a narrower issue; it’s not the broad scope of everything prediction markets. So perhaps we’ll receive less, perhaps we’ll receive more. We’re gonna review each of those comments. We’re not going to take this lightly.
This is not the only front of your work on prediction markets; you’ve also been going into courts across the country to argue that the CFTC should be the primary regulator of prediction markets. What do you see as the next stage in that fight?
Congress made the United States Commodity Futures Trading Commission the primary regulator for these markets. So that’s a federal regulatory framework under the Commodity Exchange Act for event contract derivatives. And derivatives contracts can trade with virtually any underlying asset.
Our statute only provides that derivatives on onions and motion picture box office receipts are excluded from our scope. And then when it comes to securities, of course the SEC and the CFTC have joint authority. So virtually any type of underlying asset can trade in the derivatives markets, but we need clear rules for that.
So, of course, we’re taking the steps of proposing rules in this area, and we’ll continue to litigate against states that are seeking to nullify federal law.
So I was told that you were tracking Minnesota when they were considering legislation that dealt with prediction markets. The CFTC, of course, then sued them last month. Are there other states considering similar bills that you kinda have your eye on?
We’re evaluating this across the country. To the extent any state proposes a law that is illegal — essentially a law that conflicts with federal law — we have to take action. We’re also monitoring, for example, where states are bringing criminal charges against federally regulated exchanges that are offering products that are legal under federal law. They’re claiming that you know state law conflicts with that. But there’s a very well-established regime for conflicts. When you’ve got exclusive jurisdiction with respect to a federal regulator, that supersedes and overrides the state law. And so we’ll continue to enforce that. We are looking out for any states that attempt to propose these laws or finalize these laws, and we will take legal action.
Is it your hope that this winds up before the Supreme Court and that there is a ruling that can kind of set the tone for the indefinite future?
A Supreme Court ruling on this really will settle the matter, but Congress did so when it drafted our statute. So I don’t think this is so much an area of law where there’s a lack of clarity. I think the statute’s very clear. It’s in the black-letter statutory text.
But of course we welcome judicial decisions. Thus far, the courts that matter, the federal courts, and the circuit courts, the appellate courts have found that the CFTC has exclusive jurisdiction over this area. We await other appellate decisions in, for example, the Ninth Circuit; we expect that decision to come out soon. So to the extent there’s any conflict between these courts and there’s a split in the decisions, of course the Supreme Court may take that up and we’d welcome that decision.
But thus far, we’ve been very successful in arguing these points in court and again, it’s in the statute; it’s very black-letter. Congress can change that if there are concerns. I think much of this state nullification campaign really should probably be won. Talking to the Hill, rather than spending time suing in criminal actions, registrants who are attempting to comply with the law — that’s not good for business in the United States.
You brought up Congress: I spoke with Senate Agriculture Chair John Boozman earlier this year, who said he wanted to bring you in to talk about what you thought legislation could look like. What is the bill that you’re envisioning as far as giving the CFTC the tools it needs to oversee prediction markets?
We have all the tools we need under our statute, so there’s nothing in particular that I think needs to be added. In terms of working with the Hill, we’re always happy to provide technical assistance on different bill proposals. So Senator [Dave] McCormick has a bill out that we’ve also provided technical assistance on. We talked to Senator [Bernie] Moreno, who’s really been a leader on this. He had a unanimous resolution on the Senate floor regarding the insider trading and activity of trading on the Hill. We agree with all of that.
Our statute’s very clear; we prohibit insider trading, we prohibit manipulation, fraud, and other types of abuses. So we’re always willing to work with the Hill to make sure we strengthen that to the extent there’s areas we can strengthen it, or getting congressmen and congresswomen to agree that this is nonsense. They’re not going to endorse it.
Do you think something passes this Congress?
It’s always difficult to get things across to the president’s desk. We’re really excited about the Clarity Act; we’re hoping to get that to the president’s desk in the next month or two. … That’s our area of focus right now when it comes to legislation.
Speaking of the Clarity Act, a big part of that conversation obviously has been the number of commissioners at the CFTC; we’ve seen Republicans and Democrats in the House and the Senate call for additional commissioners at the agency. Do you have any sense of when we might see that materialize?
The president makes these decisions. So the president will choose or or choose not to appoint other nominees to be on the commission. Of course, the Democrats, Chuck Schumer, has to put up his nominees as well. I’ve not seen those. so I would welcome him to put those names forward. I’ve said very clearly that I am looking forward to working with whoever the president nominates.
These are tough decisions as to who he’d put on the commission. We have to get that right. We don’t want to put people on the commission that aren’t qualified. It’s very serious business that we do here. But we are looking forward to those appointments in the future and I will support and work together with the president however I’m asked to to help with those issues.
Speaking of staffing elsewhere at the agency, there was most recently another round of buyouts. What do you say to folks who raise concerns that the agency is not staffed to the degree it should be?
We’re working on hiring over a hundred people to come into the agency. You know, it’s really important when you think about these agencies. We’ve gotta consider waste abuse and what the appropriate level of staffing is; who’s appropriate to be in the agency.
This is an opportunity under the Trump administration to change the way our agencies operate. And what I mean by that is we’re leaning into AI, we’re leaning into new software tools, we’ve made this agency incredibly efficient in just a short period of time. We’re using things like AI agents to evaluate insider trading in our markets. We’re using AI agents to take a first pass in reviewing the many comments we receive on a rule proposal. This is work that would take a ton of man hours that we can do in just minutes or hours using these tools.
Digging back into that work you’ve been doing, the CFTC’s approval of crypto perpetual futures rocked traditional derivatives exchanges; CME Group CEO Terry Duffy last week called it a “disaster waiting to happen.” What do you say to those types of stakeholders when making a decision like this?
Incumbents are always going to fear the future, right? We’ve got a whole new market here with lots of new participants, and so the landscape’s changing. A lot of this market was offshore for too long. It was pushed offshore by the prior administration. Ninety percent of the crypto market volume is in these perpetual contracts that were trading offshore, and Americans were accessing these products, and there was absolutely no regulation.
We are bringing these markets to the United States with clear rules and regulations. And this has been from the top — from the president of the United States — the goal. We are making the United States the crypto capital of the world. And that means allowing for these products to be made available in the US, but under clear regulation. We are not “anything goes,” And you know, there are many incumbents out there, you named one, that are afraid of this technology. It’s limited the transaction fees, maybe, they’re receiving on their exchange, but this is good for investors. This is protection for investors, and this also is saving them transaction fees on, for example, rolling contracts.
You’ve spoken at length about prediction markets acting as institutional markets — a tool that a retail consumer doesn’t just use, but maybe a bank or another financial institution uses. What do you think needs to happen between now and then to deliver that reality?
Well, we are seeing a ton of institutional interest and use cases for blockchain technology and for the new products in our markets. We’ve seen, for example, prediction markets being incorporated into institutional portfolios to hedge really narrow tailored risk.
You might have someone with a Tesla equity position and they wanna manage the risk of the number of cars that Tesla will produce in a quarter: You’ve got contracts for that. You might have someone that wants to manage the risk of the Strait of Hormuz opening or closing: You’ve got contracts for that in the event world. And then you’ve also got this now really interesting ability to tokenize different types of assets — stablecoins, crypto assets, all these things — and exchange that 24-7 over the weekend, 365, right?
And so that really, I think, is a great adjunct to these prediction markets, to a lot of other novel 24-7 markets in the crypto space where you’re able to exchange collateral 24-7. You’re able to move positions. You’re able to reliably trust in the blockchain networks to record that information. … Swap-data reporting has been such a mess ever since Dodd-Frank. It really has relied on manual input of information. And so people are getting sued over an error in Excel spreadsheet. We can get all this right through blockchain technology. The network itself will record the transactions and we’re able to see that. So we’re really excited about all these new technologies.
It’s kind of a confluence of many different things. We’re also seeing a lot of interest in AI agents and agentic finance. That’s going to change our markets. We’ve proceeded really from this era of pit trading to electronic markets to blockchain and AI-based markets. And we’re excited about it. We think this is really a great opportunity for America to lead and to set clear rules of the road and build a new frontier of finance here in the US.
The Vail CEO, who’s maybe the most exposed to weather of any CEO on the planet, doesn’t hedge on prediction markets when it comes to weather. Does that suggest that these products are not institutional enough yet?
I’m not here to merit-regulate or tell people prediction markets are good or bad. I mean, this is a product within our framework. So we are seeing institutional adoption and interest in it. When that happens, I’m not here to tell you that. And I’m not here to say they should be doing that or should not. It’s a product that we will regulate here in the United States.
Our approach is if the product exists, if there’s interest in it, we’re here to regulate it to make sure that it’s got investor protections and that we don’t have another financial disaster as a result of the product being traded offshore. I mean, if you think about FTX as a good example, when FTX imploded, that was largely because the United States did not take leadership on bringing that within the regulatory framework. Many of the products that incumbents have expressed concern about, they were only available offshore. And that was because the United States did not create a regulatory regime for it. The one piece of FTX that survived, that was able to protect customer funds, was the CFTC-regulated entity.
I spoke with someone at a bank maybe two weeks ago who said that the banks are really excited about prediction markets as a product, but because of the sheer volume of compliance that they face, they would need stricter rules around insider trading, around age limits. Do you think that’s where we’re headed: adding those types of guardrails so that banks who face such regulatory scrutiny could bring them into the fold?
Going back to one of the points I made earlier, if you look at the last administration, they spent all of their time suing the exchanges trying to comply with the laws and offer these products here in the US. They spent no time policing insider trading that was happening offshore or insider trading that was kind of happening as a result of this lack of clarity around the rules. We have taken action. We’ve brought a number of cases already. We’ve got many more in the pipeline.
We’re on top of insider trading, and I do think that that is key for an institution to come to the market. They don’t want to come into markets where they’re going to be cheated or abused, right? Those rules are critical to be enforced and we will continue to do so. But I will say a lot of the reason that you’ve got people concerned and calling out abuse and issues in our markets — they’re the same people that failed to take action under the last administration. So I put that back on them.